US stocks rebounded strongly, with the Dow jumping nearly 4% after plummeting yesterday on the shock of Standard & Poor's downgrade of the US credit rating.
The Dow Jones added 429.92 points, or 3.98%, to 11,239.77. The S&P 500 climbed 53.07 points (4.74%), at 1,172.53, while the Nasdaq jumped 124.83 points (5.29%) at 2,482.52.
Most of Europe's stock markets ended days of sharp declines this evening and closed higher after another day of volatile trade.
London's FTSE rallied 96 points (1.9%) to close at 5,165 while the Paris CAC gained 51 points (1.6%) to end at 3,176 and the Frankfurt DAX eased six points (0.1%) to close at 5,917. Dublin's ISEQ index closed 71 points (2.9%) higher at 2,466 this evening.
Last night, Wall Street saw its worst trading day in almost three years. In the first trading session since the historic downgrade of the United States' AAA credit rating by Standard & Poor's, the Dow Jones lost 635 points (5.6%) to end at 10,809, while the Nasdaq plunged 6.9% to 2,358 and the S&P 500 lost 6.7% to 1,119.
In Asia, Tokyo's Nikkei ended down 1.7% at 8,944, having fallen by around 4% earlier. Hong Kong's Hang Seng fell 5.7% to 19,331 as an earlier rally was wiped out in late trading.
The intervention of President Obama, who insisted that despite the downgrade of US debt, it remained a triple-A country, failed to impress investors.
However, borrowing costs for Spain and Italy continued to ease today on bond markets after the European Central Bank intervened in the market as part of efforts to tame the euro zone debt crisis.
The yield, or interest rate, on 10-year Italian bonds fell to 5.2% this evening, while the Spanish rate dropped to 5.08%. Ireland's 10-year bond yield, meanwhile, stood at 9.88% this evening.
Trichet calls on euro zone govts to do their 'duty'
European Central Bank chief Jean-Claude Trichet today called on European governments, notably Italy and Spain, to 'do their duty' in reducing public deficits and stabilising their finances.
'Since the fall of Lehman Brothers, this is the worst crisis since the Second World War,' Trichet warned on Europe 1 radio, referring to the collapse of the US investment bank in September 2008 that triggered a global financial crisis.
In this context 'we expect governments to do what we consider to be their work, their duty,' Trichet said.
'We have been extremely clear with the Italian government over recent days in asking for a number of decisions to be taken, which have been taken, and to speed up in particular a return to a normal budgetary situation,' he said.
'We have asked the same thing of the Spanish government. We have asked European governments as a whole, 17 of them, to speed up the decisions taken on July 21 during a euro zone summit meeting,' he added.
The European Central Bank said yesterday it would resume purchases of euro zone government bonds so as to ease the pressure on the weakest, notably Italy and Spain, whose borrowing costs soared to unsustainable levels in recent weeks.
Trichet said governments should put the decisions taken at last month's euro zone summit into action 'as quickly as possible'.